§ Mr. Summerson
To ask the Chancellor of the Exchequer by what percentage corporation tax would have to be increased to raise an amount equivalent to the amount raised by the uniform business rate in 1989–90 and 1990–91.
§ Mr. Maude
[holding answer 16 December 1991]: Assuming no changes in company behaviour, the corporation tax rate, applied to profits from 1 April 1988 onwards, would need to have been more than 20 percentage points higher to yield a sum over these two years equivalent to the amount raised from non-domestic property by way of rates.
In the absence of rates, the required increase would have been significantly less because rates are allowed as a deduction in computing profits for corporation tax. Information required to quantify the level is not available.
Rates raise revenue to pay for services provided by local authorities by taxing the occupation of non-domestic property. As such, they are levied on unincorporated businesses, partnerships and the self employed who are liable to income tax, as well as the corporate sector which is liable to corporation tax.